ID Bar Business Associations

Question 1

Under Idaho's Uniform Limited Liability Company Act, which of the following is the default rule for management of an LLC?

Accepted Answer

Member-managed, with each member having equal rights in management

Answer

Manager-managed by a board of directors

Answer

Manager-managed by a single appointed CEO

Answer

Court-appointed management

Question 2

Under agency law, which of the following best describes actual authority?

Accepted Answer

Authority that the principal has expressly granted or impliedly granted to the agent

Answer

Authority that a third party reasonably believes the agent has

Answer

Authority that arises from emergency circumstances

Answer

Authority granted by statute

Question 3

In a general partnership under Idaho's Uniform Partnership Act, partners are personally liable for partnership debts:

Accepted Answer

Jointly and severally for all partnership obligations

Answer

Only up to the amount of their capital contribution

Answer

Only if the creditor proves the partner was negligent

Answer

Only for their proportionate share of the debt

Question 4

Which of the following best describes 'piercing the corporate veil' in Idaho?

Accepted Answer

A court disregards the corporate entity to hold shareholders personally liable when corporate form is abused

Answer

A shareholder may sue the corporation for failing to pay dividends

Answer

A court merges two corporations for regulatory purposes

Answer

A creditor forfeits its security interest in corporate assets

Question 5

Under Idaho corporate law, directors owe which of the following duties to the corporation?

Accepted Answer

A duty of profitability and a duty to maximize shareholder value

Answer

A duty of care and a duty of loyalty only

Answer

A duty of care, a duty of loyalty, and a duty of good faith

Answer

No fiduciary duties under Idaho law

Question 6

Under the business judgment rule, a court will generally defer to a board's business decision unless:

Accepted Answer

The directors were not informed, acted in bad faith, or had a conflict of interest

Answer

The decision was not profitable for the corporation

Answer

Shareholders voted against the decision

Answer

The decision resulted in a lawsuit